UK car output declined by 11% in July, with 121,051 units produced, according to SMMT data. The decline was mainly driven by lower production for the domestic market, but the result was largely in line with expectations when set against a particularly strong sales month in July of last year.
The SMMT said that cumulative output was in line with forecasts (down just 4.4% on last year), with almost 1m cars leaving production lines – 81.3% of those for export markets.
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The SMMT said that a raft of factors were behind July’s fall, including model changes, seasonal and operational adjustments and preparation for the introduction of the tough new emissions standards (WLTP).
Production for export in the month fell 4.2%, while 35.0% fewer cars were built for the UK market. However, the declines follow a particularly strong July in 2017 when the launch of several new models boosted output by almost 10,000 units and resulted in a substantial 17.7% rise in British demand for the month.
In the year to date, the sector remains broadly on track to meet 2018 expectations, with 955,453 cars built in the first seven months. While production for the UK is currently down 16.0% compared with the same period last year, exports remain strong, dipping by a more moderate 1.2% and accounting for 81.3% of all output.
Mike Hawes, SMMT Chief Executive, said: “While the industry is undoubtedly feeling the effects of recent uncertainty in the domestic market, drawing long term conclusions from monthly snapshots requires a health warning.
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By GlobalData“The bigger picture is complex and month by month fluctuations are inevitable as manufacturers manage product cycles, operational changes and the delicate balance of supply and demand from market to market. To ensure future growth, we need political and economic clarity at home, and the continuation of beneficial trading arrangements with the EU and other key markets.”
Justin Benson, Head of Automotive at KPMG in the UK, also said that the month’s decline was too be expected after such a strong month last year. He said: “The latest SMMT numbers come after recent historic highs for production levels in the UK. So some levelling out is not unexpected, particularly as the industry enters a hugely disruptive period with electric, connected and autonomous vehicles entering the market over the next few years.
However, Benson also warned on the export outlook and rising trade tensions globally. “The export numbers are a little worrying; 80% of cars produced in the UK are for export and given the relatively buoyant consumer markets in the US, China and the EU, the concern would be that tariffs, whether Brexit or others, will make consumers around the world start to think twice about buying new cars.”
Stuart Apperley, Director and Head of UK Automotive at Lloyds Bank Commercial Banking, highlighted continued diesel uncertainty as a drag on demand and output. He said that those looking to buy new cars require reassuring that “pure diesel engines won’t be punished during the lifetime of their next vehicle”.
